Question

Walker & Janosko is an Internet advertising agency. The firm uses a job cost system in which each client is a different “job.” Walker & Janosko traces direct labor, software ­licensing costs, and travel costs directly to each job (client). The company allocates indirect costs to jobs based on a predetermined indirect cost allocation rate computed as a percentage of direct labor costs.
At the beginning of the current year, managing partner Laurie Walker prepared a budget:
Direct labor hours (professional)................................................. 17,100 hours
Direct labor costs (professional).................................................. $ 2,052,000
Support staff salaries................................................................... $ 170,000
Rent and utilities......................................................................... $ 46,000
Supplies...................................................................................... $ 459,300
Lease payments on computer hardware..................................... $ 60,000
During January of the current year, Walker & Janosko served several clients. Records for two clients appear here:


Requirements
1. Compute Walker & Janosko’s predetermined indirect cost allocation rate for the current year based on direct labor hours.
2. Compute the total cost of each job.
3. If Walker & Janosko wants to earn profits equal to 20% of sales revenue, how much (what total fee) should it charge each of these two clients?
4. Why does Walker & Janosko assign costs tojobs?


$1.99
Sales3
Views241
Comments0
  • CreatedAugust 27, 2014
  • Files Included
Post your question
5000